For those who are not aware just to let you know Goldman Sachs conducted their first ever bord meeting in India against a deteriorating economic and political backdrop in the country, where business is slow, economic growth has cooled and regulation has become a minefield for foreign investors.

GAAR stands for General Anti-Avoidance Rules which was presented by Finance minister in this year finance bill acting as anti global investor and the FIIs are already pulling the plug on such investments which will affect the flow of money into the capital markets.

Asia’s biggest international brokerage CLSA in its March 27 note to clients in India said it would not be issuing any further participatory notes or P-Notes starting April 1 and will refrain from increasing its current P-Note book in India.In process Goldman Sachs, Citigroup, Barclays, J P Morgan, HSBC and Morgan Stanley have joined the bandwagon.

P-Notes permits FII to enter India without getting registered and they are the biggest instrument for overseas clients of FIIs and their sub-accounts use such instruments to invest in Indian stock market, as these notes are not issued in the country and are used outside, they are also called offshore derivative instruments or ODIs.

The GAAR proposal will lead subject to tax at some point in time but the exact nature of that tax is not clear another backdrop of GAAR that it will lead to quoting Singapore as the next destination, as the government is busy clamping Mauritius treaty, GAAR could over ride tax treaties with Singapore too.

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